Senator EDWARDS (South Australia) (12:38): I rise to speak on the Fairer Private Health Insurance Incentives Bill 2012 and related legislation. These bills will see the private health insurance rebate means tested and the Medicare levy surcharge increased for those who choose not to have private health insurance. The private health insurance rebate, a coalition initiative, saw private health insurance membership climb during the Howard years from 30 per cent in the 1990s to 47 per cent in 2008. On most recent industry figures, some 52.9 per cent of the Australian population have some form of private health insurance. The Howard government provided the incentive and increased the choice for individuals and families to take out private health insurance. I support a mixed public and private healthcare system where Australians have the choice to take out private health insurance. I also support the rebate for increasing the choices available to all of us.

Australia has one of the best healthcare systems in the world. We should strive for improvement and for it to cost less. Our healthcare system is a delicately balanced mixture of public and private. In my home state of South Australia, with a population of just over 1.6 million people, there are some 1,008,334 holders of private health insurance, according to private health industry figures. However, the cost of providing health care continues to rise. Figures from the Australian Institute of Health and Welfare reveal that in the 10 years to 2009-10 health spending grew in real terms by an average of 5.3 per cent, compared with an average real growth in GDP of 3.1 per cent a year. Spending on health in Australia costs the Commonwealth, state and territory governments over $120 billion a year. Therefore, it makes sense to encourage wherever possible individual investment in our healthcare system through individuals' choices to co-invest in their own private health insurance. It simply makes no sense to remove the incentives for individuals and families to invest in their health provision.

Currently we have over 11 million private health insurance members who are contributing extra financial resources to the health sector, so that all Australians can benefit from a stronger health system. Both public and private must continue to co-invest. But rather than rewarding these members this legislation seeks to disincentivise this private investment in our healthcare system which could have some quite significant impacts over the next five years. Labor is pulling the rug from money that could be co-invested in our healthcare system.

We draw on research by Deloitte, which Senator Williams so succinctly drew on in this debate, that shows that up to 1.6 million Australians will drop their private hospital cover over five years, and up to 4.3 million will downgrade their hospital cover. A recent iSelect survey found 49 per cent of people would review their cover as a result of the rebate changes. Further, the Deloitte report found that by 2016 private health insurance premiums are expected to be 10 per cent higher than they otherwise would have been. The research also shows that between 2012 and 2016 an extra 845,000 Australians would be admitted to public hospitals as a consequence of these bills before us today. Deloitte estimates that the average waiting time in public hospitals would increase from 65 days to a staggering 259 days if no additional public capital investments were made in the next five years.

The impacts of this legislation are widespread. As one example, the Australian Physiotherapy Association claims that ancillary treatment cover, also known as general treatment or extras cover, pays rebates for visits to physiotherapists and other general providers such as dentists and podiatrists. A reduction in the number of Australians holding ancillary cover will reduce access to physiotherapy and other ancillary services which are, for the most part, not covered under the Medicare Benefits Scheme. According to the Physiotherapy Association, even if a small proportion of the current private health insurance members were to drop their ancillary cover, this could have a dramatic impact on the thousands of private physiotherapy practices around Australia, and that would be magnified in the regional and country areas.

In rural Australia we are already facing a number of serious problems in the health sector and country folk do not need the additional burden of having their private insurance health rebate ripped off them. Just as those living in the cities are facing cost-of-living pressures so are those in the bush, and the means testing of the rebate represents another increased cost to rural families. For example, there is already a chronic shortage of doctors. A rural doctors workforce agency report showed that 53 doctors needed to be recruited to fill vacancies in rural South Australia alone to meet the growing demand. With all this mining going on in regions, and we are all very proud of it and all very keen for it, we actually have to service it as well. Service means doctors, and we do not need doctors' incomes being undermined by the pulling of this rebate.

Add to this the growing trend of an ageing workforce. One hundred and five out of the 423 rural GPs are over 55 years old and expected to retire within the next 10 years. In my own home town of Clare there has been a position for an obstetrics trained GP vacant for the past four years. Some people are waiting more than five weeks to see their GPs! What these people do not need is to have more money removed from their pockets when they already have average access to health services. The government's co-investment in health is and should remain paramount. Governments cannot 'rat' the budget to achieve fickle surpluses over on the economic side of their problematic government.

While only a third of all hospital beds are private, 40 per cent of hospital admissions and 64 per cent of elective surgery admissions are private. Out of the hospital network, 86 per cent of all dental services are delivered in the private sector. Clearly, the private sector has an important role to play in delivering health services to Australians under our public-private health care system. In 2010 the Productivity Commission acknowledged that private hospitals were on average more efficient than public hospitals. It also found that smaller public hospitals, many of which are located in more remote communities, were found to be less efficient than similar-sized private hospitals. Therefore, any policy change that reduces funding to the private sector, which means-testing the private health insurance rebate will do, will mean underfunding the most efficient hospitals in our country.

Even the South Australian state Labor government acknowledged the role of the private sector in supporting the entire health system. Way back in 2004 a background paper, 'Challenges for health services in rural, regional and remote South Australia: achieving better health outcomes' said:

Private in-patients in public hospitals significantly contribute to the revenue of public hospitals, as private health insurers pay costs to the public hospital just as it would to a private hospital—

It is not complicated. This basic analysis does not change over the years! That whole proposition still remains in play in 2012.

While Labor preach that this is about a fairer health system and use divisive rhetoric that private health insurance is for rich people only, some 5.6 million of the 12 million private health insurance holders have a household income of less than $50,000 per year. Clearly, private health insurance is seen as an essential part of a household's expenditure and highly valued by a significant number of Australians. While all of these households will not have the rebate removed, they will feel the impact of the changes ripple through as a result of those people who have been slapped with a rise in their health cover drop their private health insurance and premiums begin to rise. It just makes sense. Insurance is always about the money pool. If you have more people contributing, the less they have to contribute. You take people out of the pool, then the cost of cover will always increase for the remaining participants. All this on top of the extra cost of living with the introduction of a ridiculous carbon tax!

The Labor Party and Greens continue to peddle the concept that cleaners should not subsidise millionaires' private health insurance. In reality, however, low-income earners pay no tax, or very little tax, and are not subsidising high-income earners' private health insurance. The top quarter of income earners pay two-thirds of the total tax. It is just another shadowy attempt to vilify those who see in Australia the hope, reward and opportunity the coalition sees.

Now we see private health fees set to rise by another 5.06 per cent, which equates to an additional $150 a year extra for families. This means that some families will be slapped with a double-hit—higher premiums for private health insurance and less or zero government assistance via the rebate. And of course, health costs are also expected to rise because of the impact of higher energy costs associated with the carbon tax. The Treasury modelling claims health services will only rise by 0.3 per cent, but it seems inevitable that costs for patients will rise as energy, catering, key medical supplies and other input costs increase. Not only will there be pressure on the public hospital sector, but private hospital providers will also face a likely 16 per cent hike in their energy bills, all of which is likely to be passed on to consumers and patients. Where else can the pain be transferred?

Labor talk about their fairer health care, but their poor policy choices will only result in more expensive health care for all Australians and, unfortunately, it will be those on lower incomes, working Australians whom Labor claim to represent, who will be the hardest hit.

In my home state, the state where I live, where has the Labor member for Wakefield been on this issue? As a man who knows what it is like to be a working person—being a former salesman, cleaner and a trolley collector—he should understand.

Senator EDWARDS: He did finish up there, but this is his earlier life. However, he has supported the Gillard government's continued assault on health care through means testing the rebate and the carbon tax. We have not heard a single utterance on private health insurance from the local member who is responsible for a seat where there are doctor shortages right throughout his rural communities. The Lyell McEwin Hospital, a very important hospital in Elizabeth Vale at the southern end of Wakefield, and the other hospitals in the electorate in Balaclava, Clare, Kapunda and Gawler are all facing substantial increases in electricity, catering and medical supply costs. The member for Wakefield, Mr Champion, certainly has not been a champion on health care for the 155,000 working men, women and children of Wakefield. The member of the House of Representatives who does not live up to his surname recently demonstrated how broken promises are the hallmark of the Labor government. The member for Wakefield last month was only too happy to stand on the same platform as his Prime Minister and welcome Ms Gillard to his electorate, nodding at every word she said when the television cameras were operating, yet within 48 hours this same individual abandoned the Prime Minister to support Kevin Rudd's leadership bid.

Senator EDWARDS: Mr Rudd—in his effort for leadership bid was described by some of his parliamentary colleagues as a 'psychopath'. So much for what passes for judgment within the parliamentary Labor Party. This is the same mob that tried to foist Mark Latham onto the people of Australia, then Kevin Rudd, and now they want Australians to believe—

Senator EDWARDS: Mr Kevin Rudd—and now they want Australians to believe that they can improve the private health system with a means test on the rebate. They might also try to get pigs to fly. Sadly, as is so often the case with Labor, this legislation represents yet another broken promise. Labor failed to have similar legislation passed in the Senate in May 2009 and again tried and failed in November of the same year. This was despite a commitment to not change the private health insurance rebate.

Let us face it: these bills are more about the ideological obsessions of the Labor Party. Because of their socialist DNA, they have a hatred of private enterprise. What pushes their collective button is the redistribution of wealth, taking it away from those families who work hard and smart to get ahead so that Labor can reward its camp followers, those who expect everybody else to pay for them. The ALP's contempt and disdain for private health funds is obvious. Class warfare is alive and well and, whenever Labor gets the chance to target the private sector, it does so. It is a big target for the Labor Party.

The ALP in 2012 has two themes: tax and spend. The thrust of its revenue gathering is to make those who largely do not vote for Labor pay more, yet in its smug arrogance that it knows better than others it does not seem to have dawned on the Gillard-Greens alliance that any exodus from the private funds because of the higher fees will lead to the overwhelming of the public hospital system.

I do not support these three bills because they will ultimately lead to an erosion of our healthcare system for everyone—increased health insurance premiums, increased demand on our already strained public system, reduced accessibility to ancillary services, increased cost-of-living pressure on individuals and families, and decreased choice for all Australians. These bills are not about better health outcomes. This is a cash clawback to fund Labor's growing and increasingly fanciful budget surplus and to cover up for their financial mischief in other areas. I will not be supporting these bills. I urge all members of the Senate not to support these bills in the interests of keeping health care in this country growing and improving for all Australians.